Morgan Stanley sees market returns tumbling over next 10 years

Morgan Stanley sees market returns tumbling over next 10 years
Weak economic growth and low inflation will limit investment gains.
NOV 04, 2019
A weak environment for economic growth and inflation, paired with low bond yields, portends anemic returns from a typical stock-bond portfolio over the next decade, according to Morgan Stanley. A traditional fund — split 60% equities and 40% fixed income — will see an annual gain of just 2.8% over that time, about half the average over the last two decades, the firm's strategists estimate. That's based on the S&P 500 Index returning 4.9% per annum and 10-year Treasuries handing investors 2.1% a year for a dollar-denominated investor. [Recommended video: Ed Slott: Share these two planning ideas before 2019 ends] ​ Not only will the returns be below what investors are used to, but lower sovereign-bond yields will dampen the ability of fixed-income securities to offset large declines in equities, the Morgan strategists said. [More: Lower bond yields leave advisers pursuing controversial income strategy] "The return outlook over the next decade is sobering," according to strategists including Serena Tang and Andrew Sheets. "Investors face a lower and flatter frontier compared with prior decades, and especially compared to the 10 years post-[global financial crisis], when risk-asset prices were sustained by extraordinary monetary policies that are in the process of being unwound." The assessment comes with a caveat that in the past, low return expectations failed to materialize because central bank intervention pushed up asset prices. The analysts see the U.K. having the highest return potential for equities, followed by emerging-market shares. [More: Advisers scramble to help retirees navigate looming Fed rate cut]​

Latest News

Advisor moves: RBC lands $1B UBS team in Pittsburgh
Advisor moves: RBC lands $1B UBS team in Pittsburgh

Elsewhere, Wells Fargo Advisors adds a $400 million Morgan Stanley veteran in Naples as an ex-Cetera advisor goes independent with LPL

GWG’s Heppner hires Puff Daddy’s attorneys as criminal sentencing looms
GWG’s Heppner hires Puff Daddy’s attorneys as criminal sentencing looms

According to a federal charges Bradley Heppner, 60, received more than $150 million in payments through funneling money from GWG Holdings to a shell company.

Investors accuse Broadstreet fund of alleged billion-dollar 'Ponzi-like' scheme
Investors accuse Broadstreet fund of alleged billion-dollar 'Ponzi-like' scheme

A $1B fund allegedly skimmed 30% off the top, then swapped cash for locked-up stock.

Lawsuit alleges Skechers founders manipulated $9.4B buyout to shortchange investors
Lawsuit alleges Skechers founders manipulated $9.4B buyout to shortchange investors

Insiders allegedly rewrote projections three times in four days.

Fintech bytes: FINNY signs Visionary Square for pay-as-you-go AI prospecting program
Fintech bytes: FINNY signs Visionary Square for pay-as-you-go AI prospecting program

TCI Wealth Advisors also has also tapped JIFFYAI to unify onboarding and servicing, while TradePMR adds ICE market data to its Fusion advisor platform

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor